Category Archives: energy funds

NEW YORK/LONDON (Reuters) – Jamison Capital Partners LP, a New York-based macro commodity hedge fund run by former Morgan Stanley (NYSE:MS) trader Stephen Jamison, will be shutting its nearly $1.5 billion fund and convert to a family office, a source familiar with the matter said on Thursday.

The closure of Jamison, one of the largest commodity-focused hedge funds, comes after several other big names have closed shop in recent months. They include hedge fund manager Andy Hall, who closed his Astenbeck Capital Management last summer, and Texas tycoon T. Boone Pickens, who said this month that he was closing his fund, in part due to declining health.

The Carlyle Group has closed on the new Carlyle Energy Mezzanine Opportunities Fund II. Carlyle raised $2.8 billion in this energy credit fund which is twice the size of the Energy Mezzanine Opportunities Fund I that raised $1.38 billion in 2012. The fund will provide capital to energy companies that have found it challenging to obtain capital from traditional sources. Multibillion dollar investments were made in the fund by some of the larger pension funds in the U.S.

Top executives at Riverstone Holdings LLC, one of the world’s largest energy investment firms, face the prospect of returning more than $300 million of profits they made from investments before the oil bust erased those gains, according to securities filings and people familiar with the matter.The money is related to an incentive formula employed at private-equity firms in which executives earn a cut of profits above a certain threshold for each fund.In Riverstone’s case, profits in some of its funds shriveled after U.S. oil prices plunged to below $27 a barrel earlier this year from more than $100 in mid-2014. That decline reduced the value of some companies owned by Riverstone, eliminating paper gains and could require some executives to return profits in a so-called clawback if the investments don’t regain value before the funds that hold them are liquidated.David Leuschen and Pierre Lapeyre Jr., who founded Riverstone and remain its majority owners, are the primary recipients of its portion of deal profits, known as carried interest. Through a spokesman, Messrs. Leuschen and Lapeyre declined to comment.While most private-equity funds usually keep details of their fund performance and structure private, industry executives say clawbacks are rare. Most firms want to avoid having to recall payments made to executives, some of whom may have left the firm or already spent the cash.

The well is running dry for deeply indebted energy companies. Samson Resources Corp. became the latest, and largest, victim of an industry downturn, as it filed for chapter 11 protection late Wednesday. Industry experts say more oil-and-gas companies are poised to follow the Tulsa, Okla., company into bankruptcy as oil prices remain low following a steep drop that began last year. The default rate among U.S. energy companies has accelerated in recent months to 4.8%, the highest level since 1999 and up from 3.3% in August, according to Fitch Ratings. Within that group, exploration and production companies like Samson are defaulting at an even higher rate, 8.5%, Fitch said. Default volume for such companies is the highest it has been in five years, at $10.4 billion in debt. The broader U.S. corporate default rate is 2.9%, according to Fitch. Meanwhile, the yield on a basket of U.S. junk-rated energy bonds has risen to 11%, just off its highest level since July 2009 and up from 5.9% a year ago, according to Barclays PLC. The increase indicates a lack of investor confidence that the bonds will be repaid in full. Yields on debt rise as prices fall.

Carlyle Group LP has raised $2.5 billion for an international energy fund as the private equity investor bolsters its oil and gas firepower after the collapse in prices.

Marcel van Poecke, head of Carlyle International Energy Partners, said the Washington-based firm closed the fund after commitments from 160 investors. The new fund, which will invest exclusively outside the U.S., will increase Carlyle’s war chest for energy deals to over $10 billion, the firm said.

“This is one of the best periods, if not the best, to invest in global energy,” van Poecke said in an interview.

Carlyle joins other private equity firms, including Blackstone Group LP, KKR & Co. and Apollo Global Management LLC, in raising extra funds for energy deals as oil and natural gas companies struggle to stay afloat. Oil prices have plunged more than 55 percent over the past year to about $50 a barrel. Blackstone President Tony James said in January his firm was “scrambling” to invest in energy assets.

Van Poecke said he expects a buyer’s market to emerge outside North America in the second half of the year as executives accepted lower valuations for their businesses. With most of the large oil companies saying they aren’t seeking deals to concentrate on cutting spending and maintaining their dividends, private equity may have a relatively open field.

The $2.5 billion international energy fund is the largest ever first time fund in Carlyle’s 28-year history, the company said in a statement. Carlyle surpassed a $1.5 billion fundraising target.

Riverstone Holdings is reportedly aiming to raise $1 billion for a new fund devoted to debt instruments of issuers in the downtrodden energy sector.

Riverstone first publicized the new fund in January following steep declines in energy-related credit and equity prices.

According to media reports, the fund is considering charging carried interest of 15% along with management fees on committed, instead of invested, capital. It would also have a two-year investment period, a short horizon that suggests Riverstone believes the opportunity in energy credit to be relatively brief one.

Terms for the fund have not been finalized. When launched, Riverstone’s energy credit team, a group of energy levered finance professionals hired in July 2014, will manage the fund.

Riverstone is not alone in trying to take advantage of the selloff in the energy sector, with energy credit funds in the works at Goldman Sachs, Apollo Global Management, and GSO Capital Partners, among others.

The oil slump is drawing interest from some of the savviest bargain hunters on Wall Street.

Veteran hedge-fund manager Wilbur Ross, Blackstone Group LP’s GSO Capital Partners and Apollo Global Management LLC are among those raising funds to buy the battered stocks, bonds and loans of energy firms following a 54% decline in New York crude prices since June.

More traditional investors like Western Asset Management Co. and Seix Investment Advisors LLC also have started funds to help large clients such as endowments and pension funds to place bets on the ailing energy industry.

Oil’s plunge to six-year lows has spurred an exodus from the securities of companies that explore for, produce, transport and refine oil and gas. The carnage is creating an opening for distressed investors, who snap up cheap stocks and bonds of troubled companies, seeking to profit when prices rebound or to use the investments to take the companies over in bankruptcy.